The Hartford 2008 Annual Report Download - page 209

Table of Contents
Net investment income decreased by $383
Primarily driving the $383 decrease in net investment income were a change from net income to net losses on limited
partnerships and other alternative investments in 2008 and decreased fixed maturity income. The net losses on limited
partnerships and other alternative investments in 2008 were largely due to negative returns on hedge funds and real estate
partnerships as a result of the lack of liquidity in the financial markets and credit spread widening. The decrease in income
from fixed maturities was attributable to lower income on variable rate securities due to declines in short term interest rates
as well as an increased allocation to lower yielding U.S. Treasuries and short-term investments.
Underwriting results decreased by $12
Underwriting results decreased by $12 due to:
Change in underwriting results
Decrease in earned premiums $ (160)
Losses and loss adjustment expenses
Ratio change — A decrease in the current accident year loss and loss adjustment expense ratio
before catastrophes 200
Volume change — Decrease in current accident year losses and loss adjustment expenses
before catastrophes due to the decrease in earned premium 102
Decrease in current accident year losses and loss adjustment expenses before catastrophes 302
Catastrophes — Increase in current accident year catastrophe losses (366)
Reserve changes — An increase in net favorable prior accident year reserve development 210
Net decrease in losses and loss adjustment expenses 146
Operating expenses
Decrease in amortization of deferred policy acquisition costs 9
Increase in insurance operating costs and expenses (7)
Net decrease in operating expenses 2
Decrease in underwriting results from 2007 to 2008 $ (12)
Earned premium decreased by $160
Ongoing Operations’ earned premium decreased by $160, or 2%, primarily due to a 5% decrease in Middle Market and a
4% decrease in Specialty Commercial. Refer to the earned premium discussion in the Executive Overview section of the
Property & Casualty MD&A for further discussion of the decrease in earned premium.
Losses and loss adjustment expenses decreased by $146
Current accident year losses and loss adjustment expenses before catastrophes decreased by $302
Ongoing Operations’ current accident year losses and loss adjustment expenses before catastrophes decreased by $302 due
to a decrease in the current accident year loss and loss adjustment expense ratio before catastrophes and a decrease in earned
premium. The current accident year loss and loss adjustment expense ratio before catastrophes decreased by 1.9 points, to
61.9, due primarily to decreases in Personal Lines, Small Commercial and Middle Market.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009